Offers Custom-Built Units as It Tries to Come Back From 'Smoking' PC Crisis

Dell last summer halted sales of its poorly selling, underpowered portable personal computers and scrubbed new notebooks in development. Instead, it went back to the labs, taking drastic steps to get on track in one of the hottest areas of computers.

In the wake of that stunning setback, Dell reported its first quarterly loss as a public company and saw its image shift from up and coming to down and out.

More bad news followed: Dell recalled some notebooks in October amid reports that the PCs got so hot they emitted smoke. The recall began just as Dell was returning to TV advertising for the first time in two years.

But Dell was back making money in the third quarter last year, and now it's back in notebook PCs.

Dell will unveil the notebooks, dubbed Latitude, in an ad campaign starting Feb. 22 with two-third page ads in The Wall Street Journal and USA Today, and moving next week into computer publications.

The advertising from Goldberg Moser O'Neill, San Francisco, includes lines like "All vs. almost" and "Feature shock," continuing the aggressive posturing on pricing and features that has long been Dell's style.

The new notebook computers will run on the popular 486 chips, a vast improvement over the outdated 386 chips in Dell's scrapped line.

Dell is also adding a new-product twist: custom-built notebooks. Dell in the 1980s pioneered the strategy of making mail-order PCs to customers' specs, and it will offer that option on notebook PCs.

The computer marketer wouldn't comment on its portable plans except to say a line of notebook PCs will be phased in over several quarters starting in the first half of the year. But with ads starting this week and hardware expected to ship in March, Dell is back in the notebook business.

Dell's sales approached a record $3 billion last year, when the company ranked No. 5 worldwide in PC sales. Though notebooks once accounted for more than 10% of Dell's sales, the company was considered an also-ran in portable PCs long before it pulled the plug last summer.

In returning to the market, Dell will be taking on strong entries from its larger rivals, including IBM Personal Computer Co.'s Think Pad, Apple Computer's PowerBook and Compaq Computer Corp.'s new Contura Aero.

Separately, Dell last week hired Lowe Direct, New York, for its estimated $10 million to $12 million direct marketing account formerly handled in-house, following a review that also included J. Walter Thompson Direct and Ogilvy & Mather Direct, Los Angeles (AA, Jan. 17).

Dell is expected to step up efforts to market directly to existing customers. But the company stressed this review wouldn't affect its relationship with Goldberg, whose Dell ads usually include a direct pitch and 800-number.

Lowe executives took the unusual step during the review of meeting with Goldberg to assure that agency that Lowe had no intention of going after Dell's main ad account.

"It was an unconventional move to make, but we understood the respect [Dell] had for the agency," a Lowe executive said. "We tapped into them to help build our efforts."

Gary Levin contributed to this story.

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Bradley Johnson

Brad runs Ad Age's DataCenter with colleague Kevin Brown. He also writes financial- and data-oriented stories about the marketing and advertising business for Ad Age's weekly issues. Best way to reach him is by e-mail. Brad is based out of Los Angeles.